Do You Pay Tax on UK Rental Income When Living in Spain?

If you own a rental property in the UK and move to Spain on the NLV, your UK rental income becomes subject to Spanish tax as well as UK tax. Understanding how the two systems interact — and how to claim the double taxation credit — is essential for UK landlords living in Spain.

The UK-Spain Tax Treaty and Rental Income

Under the UK-Spain Double Taxation Treaty, rental income from UK property is taxable in both the UK and Spain. However, you are not taxed twice on the full amount — Spain gives you a credit for UK tax paid on the rental income.

The mechanism: For a complete overview, see our tax on the NLV guide. For a complete overview, see our NLV income requirements.

1. You declare your UK rental income on a UK Self Assessment return (as a non-resident landlord) and pay UK income tax on it
2. You declare the same income on your Spanish IRPF return
3. You claim a credit (deducción por doble imposición internacional) in Spain for the UK tax paid
4. You pay the difference, if any, in Spain

UK Non-Resident Landlord Scheme

Once you are permanently living in Spain, you become a non-resident landlord for UK purposes. You must register with HMRC's Non-Resident Landlord (NRL) Scheme. Without registration:

• Your letting agent is legally required to deduct 20% UK basic rate tax from your rental income before paying it to you
• If you let directly to tenants (no agent), the tenant must deduct tax and pay it to HMRC

With NRL Scheme registration and HMRC approval, you can receive gross rental income from your agent or tenants, and file your own annual Self Assessment return. Apply online at gov.uk/tax-uk-income-live-abroad.

Calculating UK Tax on Rental Income

UK tax on rental income as a non-resident is calculated the same way as for UK residents:

• Deduct allowable expenses: mortgage interest (restricted to basic rate tax credit since 2020), letting agent fees, maintenance costs, insurance, council tax during void periods
• The remaining profit is subject to UK income tax at your marginal rate (20%, 40%, or 45%)
• Non-resident personal allowance: UK nationals and EEA citizens generally retain their UK personal allowance (£12,570 for 2024/25) even as non-residents

Converting to Euros for Spain

For your Spanish IRPF filing, convert all UK rental figures (income and deductible expenses) to euros using the Bank of Spain's official rate on the payment dates. Your Spanish gestor will handle this calculation, but keep detailed records of all rental income and expenses in sterling with dates.

Spanish Treatment of UK Rental Income

In Spain, foreign rental income is declared as rendimientos del capital inmobiliario (real estate capital income). Spain allows the following deductions against foreign rental income:

• Mortgage interest (on the UK property mortgage)
• Property management fees
• Maintenance and repairs
• Insurance premiums
• Depreciation (amortisation) on the property building value

The double taxation credit then reduces your Spanish tax liability by the amount of UK income tax actually paid on the property income.

Practical Example (Simplified)

Suppose you receive £10,000 gross rental income per year from a UK property, with £2,000 of allowable expenses, leaving £8,000 profit. UK income tax at 20% = £1,600. After converting to euros and claiming the double taxation credit in Spain, you would pay any additional Spanish tax only if your Spanish marginal rate on this income exceeds the UK effective rate paid.

Selling Your UK Rental Property

If you sell a UK rental property while a Spanish tax resident, you pay UK Non-Resident Capital Gains Tax on the UK property gain (rates of 18%/24% for UK residential property from April 2024) and also declare the gain in Spain. The double taxation credit mechanism applies again — Spain credits the UK CGT paid against Spanish CGT liability on the same gain.